Original | Odaily Planet Daily (@OdailyChina)
Author | Azuma (@azuma_eth)
Beijing time, July 21st - Multiple industry sources have revealed that the Trump administration has agreed to include an ethics provision in the "Clarity Act" (Digital Asset Market Structure Bill), and the relevant text has been submitted to some Republican senators. Although the specific details of the provision are not yet fully public, industry participants generally believe this progress could clear the way for an updated version of the bill text (expected to be released in the coming days) and subsequent Senate voting.
Over the past year, negotiations surrounding the "Clarity Act" have progressed slowly. After parties gradually reached compromises on earlier disagreements such as stablecoin yields and DeFi regulation, the biggest remaining controversy was how to handle potential conflicts of interest between U.S. government officials and the crypto industry. With the White House expressing willingness to concede on the ethics provision, the last major obstacle that has long hindered the bill's progress is showing signs of possible resolution.
In addition to progress on the ethics provision, another positive signal regarding the "Clarity Act"'s push emerged this morning: Patrick Witt, Executive Director of the White House Digital Asset Advisory Committee responsible for driving the bill's passage, has confirmed he will remain in his position to help the bill through its final sprint. Previous reports suggested Witt might leave his post before the "Clarity Act" entered a critical Senate phase due to training obligations with the U.S. Army National Guard, which had sparked industry concerns about the bill's pace. Witt has now confirmed that his training mission will be postponed, allowing him to continue participating in the bill's passage process.
For the entire cryptocurrency industry, the latest developments may indicate that this nearly year-long regulatory standoff has finally reached its most critical turning point.
Content and Significance of the Clarity Act (Skip if Familiar)
As one of the core legislative pieces of the Trump administration's push for the U.S. to become a "global crypto hub," the full name of the "Clarity Act" is the *Digital Asset Market Clarity Act of 2025*. It aims to establish a unified federal regulatory framework for the U.S. digital asset market.
The core objective of this bill is to address the long-standing regulatory ambiguity faced by the U.S. crypto industry in recent years — clarifying the legal attributes of different digital assets and redefining the regulatory responsibilities between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Specifically, the Clarity Act attempts to establish a digital asset classification system, categorizing assets into digital commodities, investment contract assets, and permitted payment stablecoins. Among these, digital commodities with blockchain network functionality would be primarily regulated by the CFTC; investment contract assets involving fundraising and issuance would remain under SEC jurisdiction; stablecoin issuers would mainly be regulated by banking authorities.
The significance of this framework lies in ending the years-long turf war between the SEC and CFTC over digital asset regulatory authority, providing the industry with a clearer compliance path. In the past, under former SEC Chairman Gary Gensler, the SEC tended to classify a large number of digital assets as securities based on the Howey Test, expanding its regulatory scope through enforcement actions; meanwhile, the CFTC argued that some highly decentralized digital assets were closer to commodities and should fall under its purview. This long-standing conflict over regulatory boundaries has kept U.S. crypto businesses, trading platforms, and developers in an uncertain environment.
If the Clarity Act ultimately passes, the U.S. crypto industry may usher in its first comprehensive market structure regulatory framework. For the market, its short-term impact might be boosting sentiment through improved policy expectations, but the longer-term significance lies in reducing regulatory uncertainty and providing a clearer institutional basis for traditional financial institutions and long-term capital to enter the digital asset space.
The Final Disagreement: The Ethics Controversy
The Clarity Act's journey to this point has not been easy. On July 17th last year, the Clarity Act passed the U.S. House of Representatives with a vote of 294 to 134, securing support far exceeding the simple majority requirement. However, unlike the GENIUS Act, which progressed smoothly around the same time and was eventually signed by Trump, the Clarity Act encountered more complex political maneuvering after moving to the Senate.
Compared to the House, while Republicans still hold a majority in the Senate, the Clarity Act, as a major regulatory legislation affecting the entire digital asset market structure, still requires a degree of bipartisan support to proceed to a final vote. This means the bill faces a complex negotiation in the Senate centered on regulatory direction, industry interests, and political demands.
Over the past year, disagreements surrounding the Clarity Act have mainly focused on three areas — stablecoin yield rules, DeFi regulatory boundaries, and potential conflicts of interest between the Trump administration and the crypto industry. Now, the first two major disagreements have gradually cooled as negotiations progressed. Regarding stablecoin yields, once the most contentious issue, parties have reached a compromise solution: "prohibiting yield purely for holding stablecoins, but allowing rewards based on actual activities."
Now, the only issue remaining on the negotiation table is the final disagreement: the ethics issue. Over the past year of negotiations, Congressional members and the White House have spent significant time negotiating ethical clauses aimed at restricting the President, Vice President, members of Congress, and other federal officials from profiting from digital assets during their terms (refer to *Trump's 'Pay Stub' Exposed: Cryptocurrency Generates $1.4 Billion, Stock Trades Exceed 22,000*). With the latest developments this morning, it indicates a potential breakthrough in the last political battle surrounding the "Clarity Act."
More Pressing Than Content Disagreement: Time
However, compared to disputes over the bill's content, an even more pressing problem facing the "Clarity Act" now is time. The U.S. Congress typically enters its August recess in mid-August, leaving only about a dozen working days for both parties to complete text coordination and push for Senate consideration.
Kristin Smith, CEO of the Blockchain Association, which has played a significant lobbying role in the "Clarity Act" process, stated bluntly yesterday: "This is the most critical moment."
Smith said the "Clarity Act" has gone through a long process, and the current version already includes stronger illegal finance oversight provisions, more comprehensive consumer protection measures, and enhanced regulatory requirements for spot trading platforms. This is one of the most comprehensive digital asset market structure frameworks she has seen. If both sides can resolve the ethics-related disputes in the coming weeks, the "Clarity Act" might have a chance to complete a key breakthrough before the Congressional recess; but if negotiations stall again, this crypto regulatory framework, which has been in the works for over a year, may have to wait for a new political window.
A Historic Turning Point for Crypto Regulation?
Of course, there is still one final step before the "Clarity Act" truly becomes law. Even if the White House has agreed to accept the ethics provision, uncertainties remain regarding the subsequent text release, Senate consideration, and final bipartisan coordination. However, judging from the signals released so far, this digital asset market structure bill, which has undergone over a year of struggle, is getting closer to the finish line.
If the "Clarity Act" can achieve a breakthrough before the August 10th recess, it could become an important turning point in the history of cryptocurrency regulation in the United States and globally. Over the past few years, one of the biggest challenges for the global crypto industry has not been a lack of market demand, but the absence of a sufficiently clear, stable, and predictable regulatory framework. Different jurisdictions have vast differences regarding digital asset attributes, trading platform responsibilities, and issuance rules, forcing businesses and capital to navigate constantly changing regulatory environments.
The significance of the "Clarity Act" lies precisely in its attempt to establish a clearer rule system for digital assets through legislation. Once implemented, this framework could provide an important reference model for global markets. For trading platforms, it means a clearer registration and operation path; for developers, a more predictable innovation environment; and for traditional financial institutions, clearer compliance foundations for entering the digital asset space.
This is not just an upgrade of the U.S. regulatory system itself; it represents the global digital asset market gradually transitioning from the early stage of regulatory exploration to a more mature, institutionalized development phase.
Recommended Reading:
CLARITY Act Countdown: 25 Days Left – How Will the Crypto Market Respond if It Fails Before August Recess?
